The public battle over pending money market fund reform proposals continues, as Treasury Under Secretary Mary Miller, BlackRock CEO Larry Fink and Representative Spencer Bachus all made comments on the issue yesterday. In a talk entitled, "Remarks by Under Secretary for Domestic Finance Mary Miller at the Annual Conference of the National Federation of Municipal Analysts," Miller comments, "Both SEC Chairman Mary Schapiro and Federal Reserve Chairman Ben Bernanke have recently expressed concerns with the inherent susceptibility of money market funds to liquidity runs during times of stress. Indeed, money market funds contributed to instability during the financial crisis in 2008 and at the time, the previous Administration was forced to intervene to prevent a widespread run. Since then, the SEC has taken actions to reduce the risk of this industry by adopting new portfolio credit, maturity, and liquidity requirements through 2a-7 reforms in February 2010."

She continues, "However, while money market funds are more resilient today than they were in the lead-up to the financial crisis, as noted in both the President's Working Group Report in 2010 and the Financial Stability Oversight Council's 2011 Annual Report, further steps are needed to improve the stability of the industry and reduce money funds' susceptibility to runs. The SEC and other members of the Financial Stability Oversight Council (FSOC) are actively discussing the most appropriate way to affect this, while preserving the usefulness of these funds for investors and issuers, including those in the municipal market."

On BlackRock's latest quarterly earnings call, Chairman & CEO Larry Fink <p:>`_ was asked in the final question on the call about "money market fund reform and the likely outcomes." Fink answers, "We believe the industry has been reluctant to change. We need to be working with the SEC on money market reform. I have had dialogue with some of our fellow asset managers to work together on money market reform working with the SEC. It is our position that if we do not work together with the SEC on money market reform, the FSOC committee will make it for us. So we have been much more aggressive on addressing money market reform. We believe it's necessary for this business to ... grow again."

He adds, "We have been isolated, though, with that opinion. We have been remarkably one of the only firms to aggressively believe that we need money market reform working with the SEC with sensible, industry- and client-oriented solutions. But I must say in recent weeks we have [had] offline dialogues with other firms. I believe there is a good opportunity in front of us to work with the SEC."

Finally, a Bloomberg article, "Bachus Urges Schapiro to Study Costs of Money Fund Rules", says, "House Financial Services Committee Chairman Spencer Bachus is urging Securities and Exchange Commission Chairman Mary Schapiro to rethink her approach to rules for the money-market fund industry. In a letter to Schapiro dated yesterday, Bachus said he was unsure why the agency should spend time considering rules for money-market funds when the SEC has struggled to meet deadlines to implement rules mandated by the 2010 Dodd-Frank Act.... The letter was also signed by Representative Jeb Hensarling, a Texas Republican who is vice chairman of the financial services panel."

Bachus reportedly writes, "Given that the SEC has already missed numerous deadlines for mandatory rule-makings, the suggestion that the agency is devoting time and resources to a discretionary rule without providing Congress or the public with empirical data and economic analysis to justify such a rule-making raises significant questions regarding the Commission's priorities.... We would also like to remind you that the SEC's mandate is to ensure that investors have all of the material information about an investment, not to engineer investments so that they are free of any risk. If investors do not understand that their investments in money-market funds can result in losses, then the Commission should use its existing authority to enhance disclosures rather than change the fundamental characteristics of money-market funds."

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